The future of mobile payments in the money transfer industry

The $700bn global money transfer market plays an important role in helping migrant workers support loved ones back home.

It is a market that traditionally was served by a few very large players but is now dotted with niche firms offering innovative products in well-targeted remittance corridors (eg, UK to Nigeria).

Mobile payments are becoming an important part of the mix in money transfer. The technology is available to support them, but for many there are wider industry issues to address before mobile payments can be fully exploited.

First, providers of all types have to cater for the compliance regulations that characterise the market. These have an impact on mobile payments. Regulations such as know-your-customer and anti-money-laundering apply equally if the transaction is initiated through a mobile app as in a branch. A modern technology platform is the answer.

For start-ups and SME providers, the main issue is acquiring and maintaining a licence and a money service business bank account. External consultants can provide solutions and alternatives here.

For established players, their existing technology platform could be an inhibitor. Very few were originally built with digital in mind. Many struggle to add new services or cope with the increase in transaction volume that online or mobile services could bring.

For telecoms operators, retailers (eg, supermarkets), banks or microfinance institutions (MFIs) that want to enter the market, finding and integrating with the right send-and-payout partners is a big headache, on top of compliance and choosing a technology platform.